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Shahrokh Moinian, Deutsche Bank’s Head of Trade Finance and Cash Management Corporates for the Americas, discusses the latest treasury management trends in the region.

What are the key corporate cash management trends among North American multinationals?

It is currently a very exciting time to be working with multinational corporates (MNCs) in the Americas as they are going through a period of substantial change in terms of cash and treasury management. The recent financial crisis reemphasized the need for efficiency and finding new areas of significant savings.

It no longer is enough to implement centralized treasuries, create in-house banks and put together single instances of ERP systems globally. We need to create new areas of value. Most MNCs have tried to optimize in Europe, Asia and Latin American countries as well as reap the benefits of automation and standardization. These large corporates have also benefited from economies of scale from the payment factories and shared service centers in their home market.

Many North American MNCs are now looking to take these structures further and drive the next level of efficiencies, with a particular focus on liquidity management and supplier financing—two elements that came to the forefront of discussions during the crisis. We are therefore seeing heightened interest in financial supply chain (FSC) initiatives that can positively impact these issues in a number of ways. By extending financing to suppliers—often in exchange for more flexible payment terms—these MNCs are potentially improving short-term working capital for themselves and their suppliers, as well as looking toward overall business sustainability in the medium-to-long term.

Shahrokh Moinian, Deutsche Bank

MNCs are leveraging Deutsche Bank’s next generation treasury solutions using an integrated working capital structure for corporates that combines supply chain and payment factory structures using the same platform. Historically, supplier financing activities had been managed by the procurement department within a corporation whereas the supplier payables processing was handled by accounting based on the corporate treasury’s banking relationships. Utilizing today’s technology, there is potential to integrate these functions end-to-end to realize further scale and systems efficiencies. Indeed, MNCs are taking advantage of platforms that can manage a range of processes along the trade value chain—from purchase order to invoice to payment obligation to discount, for instance. This is an area in which Deutsche Bank has been investing heavily, before, during and since the crisis.

We’ve recently seen an explosion of interest in FSC in Europe and Asia. Has this been matched in North America? And are corporates using similar instruments to their counterparts in other areas?

Yes, the trends I’ve described above are very similar to those currently affecting corporates in the EU and Asia. Of course, there are some local differences in terms of specific instruments and structures, but the broad trends are very similar. As in other regions, some mid-cap suppliers were forced out of credit markets during the crisis and the MNC clients in North America that relied on them are determined to ensure that such a situation does not arise again. It is this concern with business sustainability—and a heightened sensitivity toward liquidity and risk—that are the principal drivers of FSC in North America as they are elsewhere.

What are the principal cash management trends among Latin American multinationals?

There are many Latin American MNCs growing at an extremely fast pace in terms of size and geography. While in the past, the focus for treasuries in these organizations was to ensure that there was sufficient funding in place to maintain international growth, today, many corporates, particularly in Brazil, have reached a size where they can formalize their treasury operations and establish regional structures. Additionally, their investment in ERP and related systems help make these structures more efficient.

How is the approach to client-servicing different in the Americas?

Corporates in the Americas generally have access to the top transaction banking providers globally. Some of these banks are able to differentiate themselves with their technology. However, the final decision in choosing a banking partner has increasingly been based on credit, advisory and after-sales service.

We at Deutsche Bank have maintained our independence throughout the financial crisis, allowing us to continue our focused strategy of remaining committed to our client base. Both then and now, our credit commitments and our ability to advise clients in an evolving regulatory landscape permit us to support our clients in changing times. In terms of Deutsche Bank’s advisory, a special team, Trade & Cash Solutions, was recently established in the Americas to assist our clientele in finding the next generation treasury solution that is right for them. This approach ensures that best practices across end-to-end working capital solutions are implemented that fit with the specific needs of individual clients. Our solutions take into account the latest regulations, technological innovation and corporate priorities.

However, it is with onboarding and after-sales service that the largest differentiation occurs. In the Americas, Deutsche Bank serves large complex corporate clients—a select client base that benefits from our “Private Banking-style” coverage and service approach. The bank has invested heavily in improving the overall “client experience” across the globe by making onboarding as efficient as possible. This was done by greatly simplifying documentation—and ensuring that, in each individual market, local experts are hired who understand local corporates and the specific issues they face.

What regional trends have you been observing in foreign exchange management?

Foreign exchange is another area where we are seeing a growing awareness of the value that can be achieved using the latest platforms and structures. In North America, clients are looking to create new efficiencies for managing smaller cross-currency payments, using an account in one currency to pay out in another currency. These smaller payments may have once fallen below the radar of treasury centers yet, cumulatively, their volume is extremely significant.

"The final decision in choosing a banking partner has increasingly been based on credit, advisory and after-sales service"

Deutsche Bank’s global cross-currency payments platform, FX4Cash, offers great savings potential for these transactions. This platform supports cross-currency payments in over 120 currencies around the world, allowing corporates to secure the best possible real-time rates on all payments and collections, regardless of size. It also delivers new ways to generate savings and to maintain greater control over the value chain of international payments.

Where else can corporates find further treasury management efficiency gains?

Another focus since the crisis has been how to obtain greater visibility over cash in order to enhance liquidity forecasting and planning. In other words, something that can be delivered through the use of an online platform that can provide real-time information on cash positions across a number of locations. Deutsche Bank’s offering in this area, the Treasury platform on Autobahn, is a product suite that includes enhanced information views, cash planning tools, active investment services and FX hedging and trading capabilities that facilitate the client’s end-to-end treasury workflow. This intuitive treasury and liquidity management application takes the client from account positioning, through the decision-making process and finally to execution. Corporate clients are able to view a consolidated liquidity position across regions, currencies and banking relationships, providing greater transparency and control to mitigate risk exposures and maximize investment returns.

Deutsche Bank continues to develop state-of-the-art solutions and ironically, since the 2008 financial crisis, we have invested more money in our core products and services than ever before. As our clients’ banking partner, we strengthened our products to help our corporate and financial institution clients respond to the changing market demands.